AHPL' net earnings grow by 73% YoY to LKR158.2 mn in 3QFY10

Asian Hotels & Properties (AHPL) has recorded a near 73% YoY growth in earnings to LKR158.2 mn in 3QFY10 predominantly driven by the hotel sector performance. During the quarter the hotel sector contributed circa 75% of company's top line and bottom line.

lUnderstandably, the hotel sector (City hotels Cinnamon Grand and TRAN) performed considerably well (LKR117.9 mn in 3QFY10 vs LKR29.1 mn in 3QFY09) where the occupancy levels during the quarter picked up to an average of 65%-70%. Earnings from the Property Development sector dipped by 35.5% YoY to LKR40.3 mn during the quarter mainly on the back of better performance in 3QFY09 due to recognition of revenue from the completion of 'Monarch' and now relatively sluggish sales and delays in receiving the payment of already sold apartment tower 'Emperor.'

Forecast net profit to dip by 17.6% YoY to LKR461.0 mn in FY10E whilst projected FY11E earnings are estimated at LKR793.1 mn (up 72.0% YoY). This is mainly on the back of improving tourist arrivals and more percent age of property sector earnings recognized in FY11.

The share is attractive on just 2.2X PBV (its peers such as AHUN trades at 3.1XPBV) even though it trades at a high multiple of 56.4X forecasted FY10E earnings and 32.8X forecasted FY11E net profit. Further share offers good value due to its dynamism (derived from the John Keells group), ability to develop and market premium properties and also the envisaged dominant position of its five star hotel properties. We rate AHPL a HOLD.Asian Hotels & Properties (AHPL) has recorded a near 73% YoY growth in earnings to LKR158.2 mn in 3QFY10 predominantly driven by the hotel sector performance. During the quarter the hotel sector contributed circa 75% of company's top line and bottom line.

Understandably, the hotel sector (City hotels Cinnamon Grand and TRAN) performed considerably well (LKR117.9 mn in 3QFY10 vs LKR29.1 mn in 3QFY09) where the occupancy levels during the quarter picked up to an average of 65%-70%. Earnings from the Property Development sector dipped by 35.5% YoY to LKR40.3 mn during the quarter mainly on the back of better performance in 3QFY09 due to recognition of revenue from the completion of 'Monarch' and now relatively sluggish sales and delays in receiving the payment of already sold apartment tower 'Emperor.'
l
Forecast net profit to dip by 17.6% YoY to LKR461.0 mn in FY10E whilst projected FY11E earnings are estimated at LKR793.1 mn (up 72.0% YoY). This is mainly on the back of improving tourist arrivals and more percent age of property sector earnings recognized in FY11.

The share is attractive on just 2.2X PBV (its peers such as AHUN trades at 3.1XPBV) even though it trades at a high multiple of 56.4X forecasted FY10E earnings and 32.8X forecasted FY11E net profit. Further share offers good value due to its dynamism (derived from the John Keells group), ability to develop and market premium properties and also the envisaged dominant position of its five star hotel properties. We rate AHPL a HOLD.

Sri Lanka Equity Analytics
World Trade Centre
Colombo, Sri Lanka
Email: info@srilankaequity.com
Web: www.srilankaequity.com